Eurozone Crisis: Greece Told Austerity Is 'Least Difficult' Way Out Of Problems

23/05/2012 14:37

PA

Greece was urged again today to stick to its austerity plan as the "least difficult" way out of its economic crisis.

The plea came after European Commission President Jose Manuel Barroso held talks with interim Greek Prime Minister Panagiotis Pikrammenos ahead of an EU summit tonight in Brussels.

Mr Barroso repeated his pledge - backed by EU leaders - that everything possible was being done to keep Greece in the eurozone and to maintain financial support for the country for as long as necessary "assuming Greece maintains its commitment to implement the structural reforms that are essential for a return to growth".

Speaking after the talks, Mr Barroso said: "Without this solidarity, Greece will not be able to return to growth and prosperity.

"I therefore underlined the importance of Greece maintaining the commitments it has made."

The Commission President added: "The Greek people have made huge sacrifices.

"I wish there were an easier way out of the crisis Greece is facing.

"The fact is that the least difficult way is the full implementation of the second (bailout) programme agreed by Greece and its international partners.

"This is the quickest way for Greece to return to growth and job creation and we stand ready to help the Greek people on this path."

The summit is making no formal proposals today, not least because of a Greek election re-run on June 17 which could decide the fate of the nation's future in the single currency club.

EU Council President Herman Van Rompuy, who will chair the summit, made it clear in a letter to EU leaders earlier this week that the talks were to be "an exchange of views" on how to boost growth and jobs across the EU.

His letter stated: "The idea is not at this stage to draw conclusions or take decisions but to prepare politically for decisions at the June European Council (summit) in the best possible manner."

That may not satisfy markets speculating on the state of the fate of Greece and the prospects of the EU finding a solution to fend off new financial assaults on the single currency and avoid "contagion" from Greece to other already troubled eurozone nations such as Spain and Italy.

Mr Van Rompuy set out "comprehensive" measures already taken in the EU on financial crisis management, tougher economic rules for the eurozone and "a comprehensive strategy for sustainable growth".

But his letter continued: "The time has come to put more emphasis on the measures more directly linked to encouraging growth and jobs, and to discuss in the most constructive manner innovative, or even controversial, ideas."

The risk is a Franco-German row at the summit over the balance between strict austerity measures and flexibility for growth, with German Chancellor Angela Merkel insisting the scale of belt-tightening being demanded in return for massive EU/IMF bailouts - largely funded by Berlin - could not be compromised.

EU officials said the talks were focusing on issues which would have long-term benefits for jobs and growth in the EU - but which would do little to resolve the immediate Greek crisis which threatens to overwhelm any radical ideas for reviving the single currency's fortunes.

Dutch Prime Minister Mark Rutte said: "The hard truth is that there are no magic solutions to solving this crisis.

"We will all have to keep our spending in check, pay off our debts and swiftly introduce healthy reforms.

"This is what will kickstart growth in a highly competitive world, and offer the young a new hope and a future."